The Power Of Workforce Analytics
Within many organizations, the Human Resources function is regarded as a non-revenue generating entity of the business- in other words, it is an expenditure. Historically, Human Resources professionals have been tasked with carrying out rudimentary and transactional processes. However, with the transition to strategic Human Resources Management, there has been a significant shift in the manner in which business units partner with their HR colleagues.
The fact that performance management is now at the forefront of many organizational conversations has positioned the Human Resources function as more of critical entity as opposed to a department of paper pushers.
Despite the fact that Human Resources professionals have consistently demonstrated their impact on organizational objectives including driving performance, acquiring high quality talent, reducing expenditures relative to healthcare benefits and more, determining the ROI or return on investment of initiatives is crucial.
Due to the fact that the HR function itself does not generate revenue, there is a need to quantify the impact and ripple effect of programs, strategies and initiatives that the organization is investing in. Along with this necessity came the emergence of Data Analysts with a focus and expertise within the realm of Human Resources metrics. Building the business case for strategic objectives by leveraging data is an essential component of the viability and impact of an organization’s HR team.
Workforce analytics apply statistical models to employee related information, providing both qualitative and quantitative studies of factors such as hours worked, employee status (full-time vs. part-time), employee retention, performance levels, absenteeism, engagement, internal mobility and impact of new-hire orientation.
By developing a dashboard of pertinent information that translates to the ‘dollars and cents’ language of organizational leaders, HR professionals will be better equipped to hold compelling and successful conversations with cross functional colleagues.
The analysis of employee performance is a key part of the justification of a multitude of initiatives including professional development and training courses. In addition to new hire orientation, organizations typically provide trainings in which business acumen, software and position specific knowledge is transferred to employees.
The cost of these trainings is contingent upon the size of the group participating, expenses associated with materials, and whether or not a third party vendor delivers the training. Justify the money spent on training by analyzing employee performance prior to and after the professional development. On a long term scale, there may also be an opportunity to develop a correlation between employee transfers and promotions with participation in trainings.
Human Resources Analysts should develop methodology to quantify the return on investment for trainings leading to employee promotions, transfers and enhanced performance.
Retention and Engagement
One of the most damaging impacts on an organization is the loss of high performing employees. Often times, replacing an impactful employee is expensive in terms of money, time and resources. Consider the loss of productivity as a result of a vacant position, as well as disturbances to critical functions.
Within sales companies, the dissent of a top seller might even mean the loss of sizeable customer accounts. With that being said, measuring the impact of initiatives created to retain employees is a necessity.
Examples of employee retention initiatives include:
- Fringe benefits
- Paid time off
- Bonuses and merit increases
- Flexible work arrangements
This may also include celebratory events within the workplace that do not appear to have a direct impact on productivity. Developing a relationship between these endeavors will justify future investments.
From a qualitative perspective, developing a correlation between retention and unprecedented practices such as remote working arrangements, will assist in the implementation of initiatives with a more significant positive impact than negative consequence.
Absenteeism, Work Hours and FLSA Status
Although the majority of data analysis that takes place within the Human Resources department is of a strategic nature, there is a segment that is more transactional. Tracking employee absenteeism provides critical insight into problems with specific employees and teams, and can trigger disciplinary action. Conversely, this may also spark a more strategic conversation, such as the impact that absenteeism has on business objectives. If there is not a significant consequence, there may be an opportunity to cut costs by downsizing, restructuring or reassigning employees.
Assessing work hours can serve two purposes:
- In alignment with regulatory compliance, non-exempt employees must be compensated for overtime hours worked.
- The amount of hours worked can be compared to organizational impacts – often times underperforming employees and process inefficiencies can be identified through the comparison of hours worked versus outputs.
It is important to remain cognizant of the fact that there are several impacts that Human Resources initiatives make on the organization that cannot precisely be correlated to revenue. With this being said, a best practice is to aggregate as much information as possible, and develop realistic and compelling data driven insights that resonate with organizational decision makers.
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